In Focus

September 17, 2007

enior investors have been the focus of regulatory news, and for good reason! At their "Seniors Summit", securities regulators released a joint report summarizing the results of their examinations of the now infamous "free lunch" investment seminars.

After scrutinizing 110 securities firms and branch offices that sponsor such seminars to entice seniors to buy often unsuitable investments, the report finds:

100% of the "seminars " were not seminars but instead were mere sales presentations;
59% of the seminars reflected weak supervisory practices by firms;
50% of the seminars featured exaggerated or misleading advertising claims;
23% of the seminars involved possibly unsuitable investment recommendations; and
13% of the seminars appeared to have been fraudulent and have been referred for possible enforcement or disciplinary action

Our seniors deserve better!

Prominent securities regulators rightfully weighed in with their call to action. Recommendations include requiring securities firms to review their supervisory practices, supervise more closely and "redouble" their efforts to ensure that investment recommendations are suitable. Likewise, regulators propose ongoing investor education efforts, focusing on "free lunch" sales seminars, and alerting seniors to the fact that such seminars may be sponsored by those who have an undisclosed financial interest in product sales.

That's good to know!

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About the Author: James J. Eccleston leads the Securities group at the Chicago law firm of Shaheen, Novoselsky, Staat, Filipowski & Eccleston, P.C., where he represents investors in recovering investment losses and financial services professionals in disciplinary, employment, and compliance matters. He has held numerous securities licenses and Chicago Bar Association leadership positions and serves as an arbitrator and mediator. He is a recipient of Martindale-Hubbell's highest rating (AV) for legal ability and ethics, and is named to the Illinois Super Lawyer and Leading Lawyer lists.
JEccleston@snsfe-law.com, 312.621.4400, www.snsfe-law.com, www.financialcounsel.com.